Citation Nr: 0013241
Decision Date: 05/19/00 Archive Date: 05/24/00
DOCKET NO. 94-04 628 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Phoenix,
Arizona
THE ISSUE
Whether an overpayment of improved pension benefits in the
amount of $105,623.05 was properly created and calculated.
REPRESENTATION
Veteran represented by: The American Legion
WITNESSES AT HEARINGS ON APPEAL
The veteran and his spouse
ATTORNEY FOR THE BOARD
K. Conner, Counsel
INTRODUCTION
The veteran had active air service from February 1953 to July
1956.
This matter comes to the Board of Veterans' Appeals (Board)
from an April 1993 determination of the Department of
Veterans Affairs (VA) Phoenix Regional Office (RO) which
terminated the veteran's improved pension benefits, effective
February 15, 1979, based on a finding that he had
fraudulently misrepresented his spouse's income since his
initial application for that benefit. In July 1992 and
December 1994, the veteran and his spouse testified at
hearings before a Hearing Officer at the RO; in December 1995
and May 1999, he testified at Board hearings at the RO.
The issues of entitlement to compensation pursuant to the
provisions of 38 U.S.C.A. § 1151 for a nose disorder, and
service connection for PTSD, residuals of a spinal injury,
residuals of a left ankle sprain, chronic aggravation of
right calf muscle damage, and generalized anxiety disorder,
were the subject of a separate decision in January 2000. As
set forth in more detail below, the issue remaining was
originally certified by the RO on appeal as "Whether the
veteran committed a fraudulent act in concealing income."
On review of the record, however, the Board finds that the
issue on appeal is more clearly phrased as set forth above on
the cover page.
REMAND
A review of the record shows that in February 1979, the
veteran submitted an application for nonservice-connected
pension benefits, claiming that he and his spouse had no
income from any source and that he was unable to work due to
disability. He also reported that they had no assets of any
kind and that their debts amounted to $225,000.
By April 1979 rating decision, the RO awarded the veteran
nonservice-connected pension benefits, effective February 15,
1979, with an additional allowance for his spouse. The
record reveals that the veteran was thereafter repeatedly and
clearly advised that his pension award was based on his
reports of no family income or net worth and that he was
required to notify VA immediately if there was any change in
his income, net worth, or that of his family. He was also
advised that if he failed to do so, an overpayment would
result which was subject to recovery.
As a condition to the continued receipt of his VA pension
benefits, the veteran was required to complete annual
Eligibility Verification Reports (EVR), beginning in June
1986. On his June 1986, June 1987, and June 1988 EVRs, the
veteran reported, over his signature, that he and his wife
were married and living together, had no income from any
source and no substantial assets. On his June 1989, June
1990, and June 1991 EVRs, he reported, over his signature,
that he and his spouse were married and living together, but
were separated; he again claimed that neither had income from
any source or any substantial assets.
Thereafter, the RO discovered that the veteran's spouse had
received substantial unearned income in 1989, which had not
been reported previously. It was also learned that the
veteran had received a relatively small amount of unearned
income in 1989, which he had likewise failed to report. In
August 1991, the RO notified the veteran and his spouse of
this and asked them to verify the accuracy of their 1989
income.
By September 1991 letter, the veteran's spouse responded that
she had not given VA permission to obtain her records and
that, until the RO's letter, her husband "never knew what I
was receiving." She stated that she had lost all of her
investments in the late 1970's through his business failures
and that since that time, she had "not told him about my
personal affairs." She stated that she had no control over
her assets as "[o]ver 75% of what I have now is in joint
tenancy with my brother which I have no control over." With
respect to the unearned income from these assets, she
indicated that "I don't consider this money income but just
getting back what I have laid out." The veteran also
verified receipt of his 1989 income.
In April 1992, the RO notified the veteran that he and his
spouse had verified receipt of previously unreported 1989
unearned income of nearly $10,000. The RO indicated that it
was assumed that he and his spouse had received this income
from January 1989 to the present and that their net worth was
approximately $198,780, assuming a rate of return of 5% on
the account. In light of this information, the RO proposed
to terminate the veteran's pension, effective February 1,
1989, and further requested that he return completed
"Request For Details of Expenses" forms and EVRs for the
years 1989, 1990, and 1991.
Later in April 1992, the veteran responded, in pertinent
part, that
I, myself, have no personal knowledge of
monies from various financial
institutions in that my wife and I do not
have a close or caring relationship. She
lives in the same house as I yet we are
estranged. As you can see from her
September 13, 1991 letter she is not
sharing financial information with me.
We remain married because of our
religious beliefs only.
In his April 1992 letter, the veteran further claimed that he
was unable to complete any of the forms requested by the RO,
as his wife had all of the necessary financial information.
He also claimed that he himself had no income from any
source. In July 1992, the veteran and his spouse reiterated
these contentions at a hearing at the RO. The veteran's
spouse again claimed that she had concealed her financial
affairs from the veteran and that she did not believe her
income should be counted.
By July 1992 letter, the RO notified the veteran that they
proposed to terminate his pension benefits from February 15,
1979, the original effective date of his pension award. The
RO explained that they proposed to find that his spouse had
had substantial assets and had been receiving unearned income
therefrom since the time he applied for nonservice-connected
pension benefits in 1979. The RO indicated that they
proposed to find that the veteran intentionally concealed
this income in order to receive pension to which he had no
entitlement, an action which constituted fraud for VA
purposes.
By April 1993 letter, the RO notified the veteran that his
pension benefits had been terminated, effective February 15,
1979. He was advised that an overpayment had resulted from
what they considered to be a fraudulent misrepresentation of
his income and that he would be notified shortly of the
amount of the overpayment. However, the matter was not
referred to VA Office of Inspector General or the Debt
Management Center. See 38 C.F.R. § 1.911(b) (1999);
Adjudication Procedure Manual, M21-1, Part IV, Subchapters
31.66 and 36.01. Likewise, it does not appear that he has as
yet been formally notified of the amount of the resulting
overpayment, although it appears that it has been calculated
as $105,623.05.
Nonetheless, in April 1993, the veteran's representative
submitted a letter indicating that the veteran disagreed with
the RO action. At a December 1994 hearing, he requested "a
global review of [the] file to ascertain exactly how much
money is due and if it's proper to keep on coming after the
veteran for that amount of money." He also requested a
waiver of recovery of the debt.
Despite these requests, in September 1995, the RO issued a
Statement of the Case (SOC) listing the issue on appeal as
"Was concealment of income a fraudulent action." The legal
provision cited by the RO in the SOC consisted of 38 C.F.R.
§ 3.1(aa) which provides a definition of fraud for purposes
of VA regulations relating to marriages, protection of
service connection, and preservation of disability ratings,
but does not pertain specifically to fraud as used in pension
cases. The SOC contained no legal citation governing the
propriety of the RO action in creating the overpayment or for
waiver of the overpayment. The veteran submitted a timely
substantive appeal later that month and the matter was
certified on appeal.
In view of the foregoing, and after careful review of the
record, the Board finds that there are procedural matters
which require the attention of the RO before appellate
consideration can proceed.
First, based on the evidence of record and the substance of
the veteran's arguments, the Board finds that the issue
properly on appeal is the validity of the pension overpayment
debt, including whether it was properly created and
calculated. This matter includes the underlying factual
question of whether and under what circumstances a spouse's
net worth and income is considered countable for pension
purposes. Whether or not any such income was innocently or
fraudulently unreported is immaterial for these purposes.
The RO has not yet considered the issue of the validity of
the pension overpayment debt in detail; moreover, the veteran
has not been provided notice of the applicable legal
authority in a SOC.
38 C.F.R. § 19.9 (1999).
In addition, the Board notes that the veteran and his
representative have, on more than one occasion, requested
waiver of the pension overpayment at issue here (despite the
fact that he has not yet been formally notified of the amount
of the overpayment). The U.S. Court of Appeals for Veterans
Claims has held that the issues of (1) the propriety of VA's
action in creating the total amount of the overpayment, and
(2) the right to recovery of the debt by VA, which includes
the question of waiver and whether the claimant is guilty of
fraud, are inextricably intertwined. See Narron v. West, 13
Vet. App. 223 (1999). Thus, the RO must address these issues
prior to further action by the Board.
In view of the foregoing, the matter is remanded for the
following:
After conducting any necessary
development, and in accord with
applicable procedures, the RO should
adjudicate the issue of the validity of
the creation of the improved pension
overpayment indebtedness, including
propriety of the amount of that
overpayment. In addressing the validity
of creation of the debt, the RO should
specifically address the allegations to
the effect that the net worth and
interest and dividend income of the
veteran's spouse are not countable to the
veteran for pension purposes. In
addressing the propriety of the amount of
the overpayment, the RO should
specifically address at what point the
veteran was charged with excessive
countable income for pension purposes.
The RO should also conduct an audit of
the overpayment at issue, to include
indicating at what point countable income
that precluded pension was realized. A
copy of that audit should be placed in
the record, as well as provided to the
veteran.
If the veteran's challenge is denied, he and his
representative should be furnished a Supplemental SOC
(including all pertinent law and regulations) and be given
the requisite opportunity to respond. In keeping with proper
procedure, the case should then be returned to the Board for
further consideration, if otherwise in order. The veteran
has the right to submit additional evidence and argument on
the matter remanded to the RO. Kutscherousky v. West, 12
Vet. App. 369 (1999).
This claim must be afforded expeditious treatment by the RO.
The law requires that all claims that are remanded by the
Board or by the U.S. Court of Appeals for Veterans Claims for
additional development or other appropriate action must be
handled in an expeditious manner. See The Veterans' Benefits
Improvements Act of 1994, Pub. L. No. 103-446, § 302, 108
Stat. 4645, 4658 (1994), 38 U.S.C.A. § 5101 (West Supp. 1999)
(Historical and Statutory Notes). In addition, VBA
Adjudication Procedure Manual, M21-1, Part IV, directs the
ROs to provide expeditious handling of all cases that have
been remanded by the Board and the Court. See M21-1, Part
IV, paras. 8.44-8.45 and 38.02-38.03.
D. C. SPICKLER J.F. GOUGH
Member, Board of Veterans' Appeals Member, Board of Veterans'
Appeals
STEPHEN L. WILKINS
Member, Board of Veterans' Appeals
Under 38 U.S.C.A. § 7252 (West 1991 & Supp. 1999), only a
decision of the Board is appealable to the U.S. Court of
Appeals for Veterans Claims. This remand is in the nature of
a preliminary order and does not constitute a decision of the
Board on the merits of your appeal. 38 C.F.R. § 20.1100(b)
(1999).